Infra News - Published on Mon, 17 Sep 2018

Reuters reported that Turkey ruled that property sales, rental contracts and leasing transactions must be made in lira from now on, halting the use of foreign currencies for such deals in a fresh step to support the ailing local currency. In a decision published on Thursday in the Official Gazette, the government said any contracts previously made in foreign currency but which are currently in effect must be converted into lira within 30 days. President Mr Tayyip Erdogan said “ All business deals inside the country should be conducted in lira. Nobody apart from exporters and importers should cross paths with foreign currency. We are solving the issue of rent in foreign currency, which concerns a lot of our vendors, once and for all. Every business in this country needs to be priced, discussed and carried out with our own currency. Further moves to support the lira were on the way.”

But economists and industry participants doubted the move would have a permanent positive impact, saying it hampered predictability and was likely to bring additional burdens for firms with foreign currency debt. Real estate sales and rental deals in foreign currency are common in Turkey, particularly in the retail sector.

Mr Hulusi Belgu, chairman of the council of shopping centres told Reuters that "Around 70 percent of the rental contracts in shopping malls are in foreign currency. There is tremendous uncertainty right now. What further regulation will follow after this decision is important. Turkey's shopping mall industry has more than USD 15 billion of debt which firms could struggle to repay if they are unable to generate foreign currency revenues, adding that such decisions may spook foreign investors who account for about USD 17 billion of a total USD 58 billion invested in shopping malls.”